The confluence of the war in Ukraine, Israel’s extraction of offshore natural gas, and the improvement of Jerusalem’s ties with Turkey and several Arab countries is bringing new possibilities for the Jewish state, as Elai Rettig explains:

Ever since the discovery of major offshore gas deposits in 2009 and 2010, Israel has been struggling to secure major export deals to Europe. . . . Israel has yet to find buyers for about two-thirds of the gas it has earmarked for export and has seen its bidding rounds for new gas exploration licenses repeatedly fail.

This could change following the Russian invasion of Ukraine, which caused a major price hike for imported gas in Europe and a new desire among EU policymakers to secure non-Russian gas supplies even at higher cost, especially liquified natural gas (LNG). . . . Israeli and regional investors are hopeful that LNG will be the next chapter for the eastern Mediterranean gas export market, ridding it of the geopolitics of pipelines.

In addition to raising natural-gas prices, the war in Ukraine is causing a major shift in global oil-transit routes, putting the eastern Mediterranean, and particularly Israel, right in the middle. . . . This reconfiguration of global oil routes can reignite and even expand Israel’s role as a transit and storage destination for Europe-bound oil.

Finally, Europe’s energy challenges are creating a major push towards alternative energy solutions in both Europe and the Arab Gulf states, offering Israel a major role as a leader in clean-tech innovation. On the European side, while the energy crisis is causing a rise in demand for oil, gas, and coal in the short term, it is also encouraging further investment in solar, wind, and even nuclear alternatives to increase independence from Russian imports over the longer term. . . . An additional market for Israeli innovation can be found in the Arab Gulf states as they look for solutions to decrease domestic demand for oil and gas through alternative energy systems.

Below, today’s newsletter will return to some other reflections on the one-year anniversary of the outbreak of the current war, but first something must be said of its recent progress. Israel has kept up its aerial and ground assault on Hizballah, and may have already killed the successor to Hassan Nasrallah, the longtime leader it eliminated less than two weeks ago. Matthew Levitt assesses the current state of the Lebanon-based terrorist group, which, in his view, is now “a shadow of its former self.” Indeed, he adds,

it is no exaggeration to say that the Hizballah of two weeks ago no longer exists. And since Hizballah was the backbone of Iran’s network of militant proxies, its so-called axis of resistance, Iran’s strategy of arming and deploying proxy groups throughout the region is suddenly at risk as well.

Hizballah’s attacks put increasing pressure on Israel, as intended, only that pressure did not lead Israelis to stop targeting Hamas so much as it chipped away at Israel’s fears about the cost of military action to address the military threats posed by Hizballah.

At the same time, Levitt explains, Hizballah still poses a serious threat, as it demonstrated last night when its missiles struck Haifa and Tiberias, injuring at least two people:

Hizballah still maintains an arsenal of rockets and a cadre of several thousand fighters. It will continue to pose potent military threats for Israel, Lebanon, and the wider region.

How will the group seek to avenge Nasrallah’s death amid these military setbacks? Hizballah is likely to resort to acts of international terrorism, which are overseen by one of the few elements of the group that has not yet lost key leaders.

But the true measure of whether the group will be able to reconstitute itself, even over many years, is whether Iran can restock Hizballah’s sophisticated arsenal. Tehran’s network of proxy groups—from Hizballah to Hamas to the Houthis—is only as dangerous as it is today because of Iran’s provision of weapons and money. Whatever Hizballah does next, Western governments must prioritize cutting off Tehran’s ability to arm and fund its proxies.